O Organics becomes not-so-private label

Safeway, Inc. will offer products from its O Organics and Eating Right brands to other stores via their subsidiary, Lucerne Foods, Inc.

In today's tight economy, consumers have been increasingly turning to less expensive, private label products. Private label sales across the major U.S. retail channels increased by $5.4 billion last year to reach a new all-time high of $74.2 billion, according to the New York-based Private Label Manufacturers Association.

According to the Food Marketing Institute, an industry trade group based in Arlington, Va., 60 percent of shoppers say they're buying more store-brand items. But what about store brand items from other stores?

"It's not an absolutely new, revolutionary strategy," says Brian Sharoff, president of the Private Label Manufacturers Association. Canada's Loblaw successfully distributed products from its President's Choice label throughout the United States in the '90s. "Wild Oats was distributing its own brands to other retailers about a year and a half ago," he said. Safeway probably "hopes to sell to retailers in their markets that they don't consider competitors, perhaps relatively small-format stores; or, to focus on regions where there are no Safeway stores," he said.

Since its debut two years ago, O Organics has become the No. 1 organic food brand in the country. About half of the products in the 300-item line will be available to non-Safeway stores. Ad campaigns will launch in the fall.